753 754 755 756 Suppose the government imposes a 10 excise tax on the sale of sweaters by charging suppliers 10 for each sweater sold Using economic analysis we would predict that the price of sweaters will increase by 10 Incorrect consumers of sweaters will bear the entire burden of the tax Incorrect the price of sweaters will increase but by less than 10 True Answer Correct the price of sweaters will decrease by 10 Incorrect An excise tax that the government collects from the producers of a good shifts the supply curve upward True Answer Correct causes a loss of revenue for the government Incorrect has a similar effect as a tax subsidy Incorrect shifts the supply curve downward Incorrect Recently the government considered adding an excise tax on CDs that can be used to record music and CD players that can record discs If this tax were enacted we would expect that consumers would pay a higher price and producers would sell fewer of these CDs and CD players than before the tax True Answer Correct no effect on the consumption or the prices paid by consumers of these CDs and CD players Incorrect that consumers would pay a lower price and producers would receive a higher price for these CDs and CD players than before the tax Incorrect an increase in economic activity due to the tax Incorrect If an excise tax is imposed on automobiles and collected from consumers the demand curve will shift downward by the amount of the tax True Answer Correct the supply curve will shift upward by the amount of the tax Incorrect the equilibrium quantity supplied will increase relative to the pre tax level Incorrect the equilibrium quantity demanded will increase relative to the pre tax level Incorrect 757 The incidence of a tax is a measure of the revenue the government receives from the tax Incorrect refers to who writes the check to the government Incorrect refers to how much of the tax is actually paid by consumers and producers True Answer Correct is a measure of the deadweight loss from the tax Incorrect An excise tax causes inefficiency because the number of transactions in a market is reduced Because the tax discourages mutually beneficial transactions there is a n from a tax quota rent Incorrect deadweight loss True Answer Correct increased consumer surplus Incorrect increased producer surplus Incorrect By law FICA the Federal Insurance Contributions Act a payroll tax is collected equally from the employers and the employees In reality the law works the employers and the employees each bear half of the burden of the tax Incorrect the employees bear almost all of the burden of the tax True Answer Correct the employers bear almost all of the burden of the tax Incorrect it s impossible to determine who bears the burden of the tax Incorrect 758 759 760 Reference Ref 7 1 Table The Market for Fried Twinkies Look at the table The Market for Fried Twinkies The government decides to tax fried Twinkies at a rate of 0 30 per Twinkie and collect that tax from the producers According to the table consumers will pay per Twinkie and buy Twinkies after the tax 1 20 8 000 Incorrect 1 30 7 000 Incorrect 1 40 6 000 Incorrect 1 50 5 000 True Answer Correct Reference Ref 7 1 Table The Market for Fried Twinkies Look at the table The Market for Fried Twinkies Of the 0 30 tax per fried Twinkie consumers actually pay while producers actually pay 0 30 0 00 Incorrect 0 15 0 15 Incorrect 0 20 0 10 True Answer Correct 0 00 0 30 Incorrect 761 762 Reference Ref 7 1 Table The Market for Fried Twinkies Look at the table The Market for Fried Twinkies The government decides to tax fried Twinkies at a rate of 0 30 per Twinkie and collect that tax from the producers After paying the tax producers will receive per Twinkie and they will sell Twinkies after the tax 1 10 3 000 Incorrect 1 20 5 000 True Answer Correct 1 30 7 000 Incorrect 1 50 5 000 Incorrect 763 764 Reference Ref 7 1 Table Market for Fried Twinkies Look at the table The Market for Fried Twinkies As a result of the 0 30 tax per fried Twinkie the government will receive total tax revenue of 500 Incorrect 1 000 Incorrect 1 500 True Answer Correct The total is impossible to calculate Incorrect Figure and Table The Market for Taxi Rides Reference Ref 7 2 Figure and Table The Market for Taxi Rides Look at the figure and table The Market for Taxi Rides If the government imposes an excise tax of 1 per ride causing the supply curve to shift upward by that amount then the government will collect tax revenues of However there will be a deadweight loss to society of 9 million 0 5 million True Answer Correct 16 million 1 million Incorrect 45 million 1 million Incorrect 50 million 0 5 million Incorrect Figure and Table The Market for Taxi Rides caused by this tax 765 Reference Ref 7 2 Figure and Table The Market for Taxi Rides Look at the figure and table The Market for Taxi Rides The figure represents a competitive market for taxi rides If the government imposes an excise tax of 2 per ride causing the supply curve to shift upward by that amount then the government will collect tax revenues of but there will be a deadweight loss to society of caused by this tax 8 million 1 million Incorrect 16 million 2 million True Answer Correct 24 million 4 5 million Incorrect 48 million 6 million Incorrect Figure and Table The Market for Taxi Rides 766 Reference Ref 7 2 Figure and Table The Market for Taxi Rides Look at the figure and table The Market for Taxi Rides If the government imposes an excise tax of 1 per ride causing the supply curve to shift upward by that amount then people who ride taxis will pay of each 1 tax 1 Incorrect 0 50 True Answer Correct 0 25 Incorrect 0 00 Incorrect 767 Figure The Market for Lattes Reference Ref 7 3 Figure The Market for Lattes Look at the figure The Market for Lattes If the government assesses a tax of 0 75 on each latte the price the consumer pays for a latte after the tax will increase from 2 to 2 75 Incorrect increase from 2 to 2 50 Incorrect increase from 2 to 2 25 True Answer Correct change but we cannot determine by how much Incorrect 768 Figure The Market for Lattes Reference Ref 7 3 Figure The Market for Lattes Look at the figure The Market for Lattes If the government assesses a tax of 0 75 on sellers of lattes the price producers will receive for a latte after the tax will decrease from 2 to 1 75 Incorrect decrease from 2 to 1 50 True Answer Correct decrease from 2 to 1 25 Incorrect change but we cannot determine by how much Incorrect
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